Australian Broker Call

Macquarie rates AMI as Outperform (1) -

Aurelia Metals' update indicated an increase in capex for the Peak lead-zinc circuit, increased exploration spend and a deferral of the Nymagee pre-feasibility study. Unfavourable results lead the broker to reduce its valuation of Nymagee, while at the same time extending Hera' s mine life by one year as suggested in the update.

Grades at Chronos will be key to reaching production guidance, the broker suggests. Outperform retained, target falls to 85c from $1.00.

Target price is $0.85 Current Price is $0.61 Difference: $0.24
If AMI meets the Macquarie target it will return approximately 39% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

UBS rates ASX as Sell (5) -

UBS observes strong equity markets and volatility in interest rates support stronger second half activity. Average daily cash equity turnover is now up 8.5% while futures volumes are running 14% higher.

Nevertheless, the broker envisages earnings growth will slow to 2.1% in FY20 and 4.7% in FY21. ASX offloaded its stake in IRESS ((IRE)) in February and UBS envisages scope for capital management at the results in August.

Sell rating reiterated, as the dividend yield has compressed to 3%. Target is raised to $62.60 from $58.10.

Target price is $62.60 Current Price is $78.30 Difference: minus $15.7 (current price is over target).
If ASX meets the UBS target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $60.66, suggesting downside of -22.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates BVS as Outperform (1) -

Following Bravura's capital raising, the broker retains Outperform and a $5.50 target. Near term share price weakness has been driven by a recent downgrade from Link Administration ((LNK)), a lack of newsflow re the proposed GBST ((GBT)) takeover and a profit upgrade from GBST, and broader market weakness across Brexit-exposed and tech stocks, the broker notes.

The broker does not see a direct read-through from Link, and while it does see the Brexit/tech issue as having an impact, a defensive earnings stream and high visibility provides some comfort. Post the raising the broker sees focus shift to growth opportunities through M&A and geographical expansion.

Target price is $5.50 Current Price is $4.91 Difference: $0.59
If BVS meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates CLW as Buy (1) -

The company has acquired a $206m portfolio comprising two office assets and one industrial. The acquisition is being funded through a $180m institutional placement.

The company has tightened FY19 guidance to 26.9c per security and introduced FY20 guidance for "no less than 3.75%" growth.

The acquisitions are in line with the stated strategy, with long 10-year lease terms and fixed increases of 3.5% per annum, and increase the exposure to quality tenants.

Citi believes the operating environment remains favourable, maintaining a Buy rating and $5.29 target.

Target price is $5.29 Current Price is $4.94 Difference: $0.35
If CLW meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.69, suggesting downside of -5.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.3

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates CLW as Underperform (5) -

Charter Hall LW REIT has acquired three assets in Canberra to be partly funded by an institutional placement at $4.74 and an SPP. The REIT has also reset its hedges in order to generate higher earnings per share.

The broker notes hedge resets do increase earnings accretion but destroy value at the same time. The broker also found fresh guidance to be somewhat soft. Underperform retained, target rises to $3.90 from $3.78.

Target price is $3.90 Current Price is $4.94 Difference: minus $1.04 (current price is over target).
If CLW meets the Macquarie target it will return approximately minus 21% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.69, suggesting downside of -5.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.3

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates DCN as Downgrade to Neutral from Buy (3) -

Citi only initiated coverage with a Buy/High Risk rating and a $3 target in May, about three weeks ago, so there will be a number of unhappy faces at the office. Company management has downgraded production guidance in significant manner.

Citi analysts today respond by saying they are "disappointed"; what else are they supposed to say? The recommendation has been pulled back to Neutral/High Risk. Target price falls to (wait for it) $0.60 as the analysts express their concern about the "low Reserve-to-mill reconciliation for gold ounces across the whole operation".

Estimates have been reset, with the analysts explaining what essentially has occurred is that projected output in ounces went down -30% on +41% in costs, while valuation multiples were reduced on top.

Target price is $0.60 Current Price is $0.44 Difference: $0.16
If DCN meets the Citi target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $2.25, suggesting upside of 411.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Deutsche Bank rates DXS as Hold (3) -

Deutsche Bank analysts attended a tour of assets organised by Dexus Property. Their key takeaway from the tour was that leasing conditions in North Sydney remain strong.

Also, the analysts report Dexus management highlighted that 100 Mount Street is now 95% leased, well ahead of time and budget. In addition, management emphasised its trading strategy, which has delivered an average unlevered IRR of 30% over the last 7 years.

Hold. Price target $12.38.

Target price is $12.38 Current Price is $13.39 Difference: minus $1.01 (current price is over target).
If DXS meets the Deutsche Bank target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.68, suggesting downside of -5.3% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates DXS as Underperform (5) -

Dexus dragged analysts around North Sydney and St Leonards to highlight positive office market conditions, but the broker remains wary given supply set to come on to the market in the next two-three years. 

Despite an incrementally positive update, the broker maintains caution on supply amidst softening demand growth. Underperform and $11.36 target retained.

Target price is $11.36 Current Price is $13.39 Difference: minus $2.03 (current price is over target).
If DXS meets the Macquarie target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.68, suggesting downside of -5.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Ord Minnett rates DXS as Hold (3) -

The company has hosted a tour of its developments in North Sydney and St Leonards. Ord Minnett also updates forecasts to include the acquisition of 80 Collins Street, Melbourne.

Forecasts for adjusted funds from operations have lifted 3-4% over FY20-24. This leads to an increase in the target to $13.50 from $13.00. Hold rating maintained on valuation.

Target price is $13.50 Current Price is $13.39 Difference: $0.11
If DXS meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $12.68, suggesting downside of -5.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgans rates GBT as Add (1) -

Morgans notes one of the largest retirement income providers in the UK, Canada Life, has chosen the company's Composer wealth management platform.

The broker expects Canada Life will add at least $50m, mostly in licence fees, to revenue over the next decade. Forecasts and valuation are upgraded to incorporate the win.

Add rating maintained. Target is raised to $3.79 from $3.47.

Target price is $3.79 Current Price is $2.65 Difference: $1.14
If GBT meets the Morgans target it will return approximately 43% (excluding dividends, fees and charges).

Current consensus price target is $2.83, suggesting upside of 6.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgan Stanley rates JHX as Overweight (1) -

Morgan Stanley notes FY19 is the fourth year of lower-than-expected claims for asbestos compensation and KPMG expects the peak in claims to approach in FY21.

The broker envisages a declining risk profile for the liability, forecasting payment of 35% of cash flow will cease from FY25. This should allow investors to focus on the core business.

Morgan Stanley reiterates an Overweight rating, $21 target and Cautious industry view.

Target price is $21.00 Current Price is $18.12 Difference: $2.88
If JHX meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $21.57, suggesting upside of 19.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY20:

Forecast for FY21:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgans rates MVF as Add (1) -

Management has guided to a small improvement in FY19 net profit and Morgans assesses this implies more than 15% growth in the second half.

The broker believes guidance is readily achievable as competitive pressures have moderated. Modest upgrades are made to FY20 and FY21 estimates.

Add rating maintained. Target is raised to $1.25 from $1.13.

Target price is $1.25 Current Price is $1.29 Difference: minus $0.04 (current price is over target).
If MVF meets the Morgans target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates NHC as Neutral (3) -

New Hope's quarterly production report featured a mix of a beat in NSW and a miss in Queensland. A slightly weaker yield in NSW tapers the brokers expectations for Bengalla, and New Hope's debt facility will be drawn down further to pay for the remaining 10% stake.

The broker had always remained cautious on the New Acland stage 3 expansion, and outside media reports have suggested approvals will not be granted before the company is forced to begin a ramp-down. The broker sees the potential for considerable downgrades to consensus estimates. Neutral retained, target falls to $2.50 from $3.00.

Target price is $2.50 Current Price is $2.61 Difference: minus $0.11 (current price is over target).
If NHC meets the Macquarie target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.27, suggesting upside of 25.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.3

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Credit Suisse rates STO as Upgrade to Neutral from Underperform (3) -

Credit Suisse believes Santos is less exposed than Oil Search ((OSH)) to risk around LNG price reviews. Santos has the strength in its balance sheet to mitigate the risk.

The broker models a -0.5% slope drop at PNG LNG in its base case or a -5c/share impact. The Darwin LNG price review presents a negligible impact, given limited remaining life but could set a precedent, the broker suggests.

Rating is upgraded to Neutral from Underperform. Target is reduced to $6.35 from $6.40.

Target price is $6.35 Current Price is $6.73 Difference: minus $0.38 (current price is over target).
If STO meets the Credit Suisse target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.03, suggesting upside of 4.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.4

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates VOC as Neutral (3) -

EQT has pulled its $5.25 indicative offer for Vocus after a brief period of due diligence, without offering a reason as to why.

The broker has dropped its target price to $4.10 from $4.70 in response and retains Neutral for the moment until volatility subsides in the share price, pending reassessment.

Target price is $4.10 Current Price is $3.74 Difference: $0.36
If VOC meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $4.05, suggesting upside of 8.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgans rates VVR as Downgrade to Hold from Add (3) -

Following appreciation in the stock, over the past year it has risen 35.7%, Morgans downgrades to Hold from Add. The base earnings year is moved to FY20 and, as a result, the target increases to $2.61 from $2.52.

The broker asserts there is a sustainable distribution yield and the stock is attractive for income investors. One third of the portfolio is independently revalued every three years.

Target price is $2.61 Current Price is $2.58 Difference: $0.03
If VVR meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $2.55, suggesting downside of -1.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.3

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates WOR as Buy (1) -

Citi notes integration of Jacobs ECR is continuing to track ahead of expectations. The broker envisages upside risk from the acquisition from both the revenue and margin perspectives. Cost synergy targets have been upgraded by 15%, with 60-70% of the synergies to be delivered in the first 12 months.

The broker believes the company will continue to leverage global delivery capabilities in India and China. Buy rating maintained. Target is reduced to $18.10 from $18.85. This reflects lower medium-term earnings and higher capital expenditure for additional investment in the modernisation of systems.

Target price is $18.10 Current Price is $13.11 Difference: $4.99
If WOR meets the Citi target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $18.41, suggesting upside of 40.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.9

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Credit Suisse rates WOR as Outperform (1) -

The company's investor briefing has shown how the combined business is positioning to capture more work as Jacobs ECR is integrated. Credit Suisse remains comfortable that, pending a smooth integration, leverage to the controlled cost base and new scale will provide unique exposure to the global energy mix.

Cost synergies have been lifted to $150m, with the majority expected to be achieved in the first 12 months, a target the broker suspects could prove conservative. Credit Suisse maintains an Outperform rating and $18.20 target.

Target price is $18.20 Current Price is $13.11 Difference: $5.09
If WOR meets the Credit Suisse target it will return approximately 39% (excluding dividends, fees and charges).

Current consensus price target is $18.41, suggesting upside of 40.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.9

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Deutsche Bank rates WOR as Buy (1) -

Deutsche Bank analysts have kept their Buy rating and lifted the price target to $20.60, effectively nullifying the target decrease put in place in February. It appears the investor day organised by the company broadly disappointed.

Deutsche Bank reports management indicated near-term activity remains somewhat muted with backlog stable between Dec-18 and Mar-19. Also, geopolitical risks are dampening expectations for project awards in the short term.

The analysts had hoped for better news, but at this point see the disappointment largely as a timing issue.

Target price is $20.60 Current Price is $13.11 Difference: $7.49
If WOR meets the Deutsche Bank target it will return approximately 57% (excluding dividends, fees and charges).

Current consensus price target is $18.41, suggesting upside of 40.4% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.9

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates WOR as Outperform (1) -

WorleyParsons has upgraded its cost-out expectations from the Jacob's ECR acquisition to $150m from $130m over two years, which the broker sees as a good signal after only five weeks of ownership.

Moreover, management highlighted a margin opportunity via shared services and an integrated delivery centre in low-cost India, which is not included in the cost-out number.

The broker continues to see the stock as undervalued and expects a re-rating. Outperform retained, target rises to $21.48 from $21.38.

Target price is $21.48 Current Price is $13.11 Difference: $8.37
If WOR meets the Macquarie target it will return approximately 64% (excluding dividends, fees and charges).

Current consensus price target is $18.41, suggesting upside of 40.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.9

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgan Stanley rates WOR as Equal-weight (3) -

Morgan Stanley believes the risks are growing for a deflationary period in oil & gas driven by the resilience of shale production in North America, which means OPEC is ceding market share and this is rarely good for oil prices over the longer term.

The main challenge for WorleyParsons' upstream business is that it it has very little exposure to shale. The broker observes some frustration by management at the investor briefing regarding the lower share price yet believes the correlation to oil prices is unlikely to disappear quickly.

Some valuation upside is envisaged from the current share price and the broker expects solid earnings growth over time. Equal-weight rating. Target is $16.00. Industry view is In-Line.

Target price is $16.00 Current Price is $13.11 Difference: $2.89
If WOR meets the Morgan Stanley target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $18.41, suggesting upside of 40.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.9

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Ord Minnett rates WOR as Buy (1) -

Ord Minnett found nothing to change its view after the company hosted an upbeat investor briefing. The focus was on the opportunities presented by the recent acquisition of Jacobs ECR.

Near-term growth appears a little more anaemic, amid caution regarding the current macroeconomic environment.

The broker is pleased with indications that further M&A is on hold, at least until the Jacobs acquisition is fully integrated. Buy rating and $18.50 target maintained.

Target price is $18.50 Current Price is $13.11 Difference: $5.39
If WOR meets the Ord Minnett target it will return approximately 41% (excluding dividends, fees and charges).

Current consensus price target is $18.41, suggesting upside of 40.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.9

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

UBS rates WOR as Upgrade to Buy from Neutral (1) -

UBS upgrades to Buy from Neutral as the stock appears more attractive on a valuation basis after a -15% reduction in the share price in the last quarter. The broker expects earnings (EBIT) growth of 96% in FY20 and 13% in FY21, supported by the acquisition of Jacobs ECR.

UBS notes an upbeat assessment of end-market capital expenditure from the investor briefing, with potential revenue synergies emerging from the cross-selling of the Worley/Jacobs ECR service platforms. Target is reduced to $16.00 from $17.10.

Target price is $16.00 Current Price is $13.11 Difference: $2.89
If WOR meets the UBS target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $18.41, suggesting upside of 40.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.9

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources